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Saturday, July 31, 2010


Is that fear in her eyes? I can't tell.

I am realizing that I trade out of fear. Not fear of losing money, but fear of losing profit. This is the only explanation I can think of for why I hold EDZ purchased at 42.70 and sold BP at 28.90 purchased at 27.50.

Speaking of BP, if one was lucky enough to short BP 59.98 and cover 26.75, then it would have been a 55.40% gain.

On the other hand, if one was lucky enough to buy BP 26.75 and sell 39, then it would have been 45.79% gain.

The percentage gain per point is more on the way up then it is on the way down. This is why you need 100% to break even on a 50% loss.

Why do I short when there is more money buying the dip?

Next, valuation is what the market wants to pay for the stock. I keep hearing that GS has a value of 120, but it is trading at 150. Keep in mind that the market can be irrational for a very long time.

Keep your eye on for short.